Gibraltar is resisting British pressure, restated on Monday by Douglas Hurd, the Foreign Secretary, to tighten legislation on its financial services.

The Minister of Government Services, Juan Carlos Perez, speaking yesterday for the Chief Minister, Joe Bossano, said: "The only issue raised by Mr Hurd with Mr Bossano was to request that legislation that we have already passed covering proceeds from drug-trafficking offences be extended to cover the proceeds of all crimes."

Gibraltar regards this - the criminalising of handling of all monies representing proceeds of any crime - as unreasonable. Mr Perez said the European Union does not make this demand of other recognised European offshore banking centres and to impose it upon Gibraltar "could discourage bone fide investors in Gibraltar".

"We think parliament in Gibraltar has the right to interpret EU law as it sees fit. We are not prepared to be pushed around by big brother," he said.

Gibraltar's Council of Ministers meets today to decide its response to Britain's latest request. Mr Bossano's government has the support of the opposition Social Democratic party. Its leader, Peter Caruano, said yesterday that it was unacceptable for the existing legislation to be widened to include possible fiscal crimes. "By discouraging investment it could deal a fatal blow to Gibraltar as an offshore financial centre."

The government in Madrid, which still claims sovereignty over the British colony, is sceptical about Gibraltar's efforts to build an independent economy on the basis of offshore banking. "The economic structure of Gibraltar is a complete fake," was one official view this week.

Madrid has been exercised recently over what it says is evidence that Gibraltar is being used as a haven for laundering drug money, and complains that the Rock's finance services sector does not meet British banking standards. But both Madrid and London agree that more evidence is needed.